Second Life Land Deal Goes Sour

In what might be a first-of-its-kind lawsuit, a Pennsylvania lawyer is suing the publisher of the rapidly growing online world Second Life, alleging the company unfairly confiscated tens of thousands of dollars worth of his virtual land and other property.

The attorney, Marc Bragg of West Chester, Pennsylvania, says game developer Linden Lab unilaterally shut down his Second Life account, cutting off his access to a substantial portfolio of real estate and currency in the virtual world. He's demanding $8,000 in restitution.

Bragg claims Linden Lab froze his account after a land deal went bad. The attorney said he found a legitimate way to purchase land at prices far below market rates, using an online auction on the Second Life website.

Bragg v. Linden Research, a civil complaint filed May 1 in West Chester's local district court, charges that Linden Lab "breached an auction contract by allowing the land to auction, accepting online payment, and then suspending plaintiff's account."

For its part, Linden Lab wouldn't address specifics of the case. But general counsel Ginsu Yoon says the San Francisco company has retained attorneys in the matter. "We intend to contest this in the appropriate forum," said Yoon. "We believe the suit to be without merit."

Known inside Second Life as "Marc Woebegone," Bragg has "in-world" real estate, nightclubs and other businesses. He says he paid $300 for a "sim," a large plot of Second Life land that normally costs a minimum of $1,000.

Second Life is one of the only virtual worlds whose members legally own the content they create. A burgeoning trade in real estate, clothing, vehicles and other goods has led to a strong and growing in-game economy, supporting full-time businesses and real estate barons.

Bragg says Linden Lab created the online auction pages that allowed him to buy land at the abnormally low prices, and that any responsibility for problems with the system rests with the company. But the hacker-like method he used to exploit the auction system may hurt his case. Bragg copied the URL for a legitimate auction, then swapped in the ID number for land not yet up for sale publicly, so there would be no minimum bid and few, if any, competing bidders.

"If they're not running their auctions properly to begin with ... the onus is on them to do that," Bragg told Wired News. "Granted people make mistakes, but they're not treating it like a mistake.

"They completely froze my account, which is a real problem, (and prevented) me from withdrawing about a million Lindens that they wouldn't allow me to exchange," said Bragg.

At about 309 Lindens to the U.S. dollar, that's about $3,200. Bragg, however, says he has managed to find ways to withdraw some of the money in his online account.

The issues have been hotly debated in the Second Life community, and when Bragg filed suit, attention sharpened.

"There will be substantial interest in the outcome of this suit from business, legal, academic and virtual-world resident interests," wrote freelance journalist and Second Life blogger Tony Walsh. "I think that this is part of the reason that Bragg filed suit. He might be the first person in history to sue over a virtual land deal gone sour."

But some established members of the Second Life community feel Bragg couldn't have much of a case.

One resident deeply involved in the Second Life real estate business says she's been following the debate over the case in the virtual world's online forums and thinks Bragg doesn't have "a leg to stand on."

"I don't know if he was trying to scam or if it was an honest mistake, but anyone who has ever been in-world here knows that you don't buy a sim for that amount of money," says Alice McKeon, a partner in dAlliez Estates, which owns 27 sims in Second Life. "I made a remark to somebody that if Linden Labs is selling sims (that cheaply), I'll buy a hundred."

For his part, Bragg argues that since the auctions were completed, they are final. "If I take a sim and price it at 1 or 10 when I want 100,000, and it sells, (Linden's) answer is tough luck, you sold it and it's your fault." Bragg said he wouldn't have invested if he'd known he could lose everything.

To those who follow the political, legal and economic issues of virtual worlds, lawsuits over virtual land have seemed inevitable for some time.

But they don't think that Bragg's suit is the one that will set precedents. In fact, some say, this suit doesn't even boil down to a property dispute.

"This case is not the case that (people interested in virtual property have) been waiting for," said Joshua Fairfield, a professor at Indiana University Law School and a specialist on the law and economics of virtual property. "As I understand how Second Life is set up, land is (the equivalent of) bandwidth. They're selling bandwidth, no different than AT&T selling the bandwidth that allows me to talk to you."

Fairfield thinks the case that everyone is waiting for "is the one about whether or not these things are real property. This (suit) is more like airline mistake cases, where people snap up cheap tickets and try to keep the tickets."

In the end, Fairfield said, Bragg's case is "about the terms of service," and according to Fairfield, U.S. courts tend to strictly enforce such agreements.

Fairfield said there is anticipation about a virtual property case because "people are eager, I think, to see the value of virtual property validated."